White House Press Release

323 #1276 IMMEDIATE RELEASE August 6, 1947 MEMORANDUM OF DISAPPROVAL I am withholding my approval from enrolled enactment H.R. 1534, "For the relief of Graff, Washbourne and Dunn. The purpose of the enactment is to effect the payment of $7,204.72 to Graff, Washbourne and Dunn, a corporation, to compensate it for losses apparently suffered in furnishing torpedo parts to the Navy Department 'under the contracts specified in the enactment. It appears that, subsequent to the execution of the contracts, the present management of the corporation advised the United States Navy Purchasing Office, Newport, Rhode Island, that it was planning to take over the ownership and management of the business and that the supplies covered by the contracts would be furnished to the Navy, provided a fair adjustment be made in the contract prices which, it was contended were far too low. In letter of April 4, 1942, the Navy Supply Officer, Newport, Rhode Island, advised the contractor, in pertinent part, as follows: "These contracts were awarded to your company on the basis of the preliminary price agreements entered into after negotiations between your company and the Naval Torpedo Station, Newport, R. I., "In your letter you state that you desire to go forward with these contracts on a basis that will not cause financial ruination to your company, and now request readjustment in the prices because they are too low. In order to relieve you of any direct loss on these contracts and to save time in obtaining deliveries under the present war conditions, consideration will be given to adjusting the prices shown on the contracts on completion on a fair and reasonable basis to agree with your actual costs for labor and overhead expense in accordance with Treasury Decision 5000. No change will be made in the allowance for profit as set forth on the preliminary price agreement pertaining to each contract. A certi- fied statement of the actual cost on each contract will be submitted by your company." Thereupon, the contractor proceeded with the completion of the contracts in accordance with their terms and subsequently submitted an invoice for $32,375 alleged to represent the amount due for adjuted costs under the contracts. The amount of the invoice subsequently was reduced to $12,656.64. It appears that Navy auditors later found that the contractor had incurred a net loss of $7,204.72, the amount carried in the enrolled enactment, in performing two of its contracts. In the consideration of the claim by the Navy Department, the contracting officer made a finding of fact wherein it was stated: "That claim as presented by the Contractor does not establish that said price increase is necessary to the continued operation of said contracts, or will effect the Contractor's ability to carry out contracts in the future or impair the productibility of the Contractor. "That said claim as presented does not establish that the Contractor performed any services in excess of the performance required under the contracts or gave up any rights or benefits to which it was entitled under the terms of said contracts, and that by reason thereof, the Contracting Officer finds that said request for increase is not accompanied by a substantial consid- eration as defined in Navy Department letter of 7 July 1943, dealing with amendments and modifications of Contracts and Agreements, pursuant to the First War Powers Act of 18 December 1941, Executive Order 9001. "That in the opinion of the undersigned, based upon the material as hereinbefore set forth, Contractor's claim, as presented, should be disallowed." (OVER)